It is insane just how many opinions and divergent views on loans are floating out there. Whilst some are founded on presumptions, others are founded on misconceptions. And like most false information, these misconceptions have spread like wildfire and have even been interpreted to be the norm.
So, in this article, we will address some of these misconceptions and provide the truth and obtainable industry practice, using the practices of a loan issuing company called E-Finance NG as a specimen.
MYTH 1: ONLY BANKS CAN ISSUE LOANS TO INDIVIDUALS AND ORGANIZATIONS.
This is very false. Banks are not the only financial institutions licensed to give out loans to individuals and businesses. Our specimen company is licensed by the Central Bank of Nigeria to issue loans to individuals and business organizations.
MYTH 2: LOANS ARE VERY CUMBERSOME AND TAKE FOREVER TO PROCESS.
This couldn’t be anymore FALSE. Maybe sometime in the past, this could have been true but not anymore. Using the practice of our specimen company, E-Finance, loans can be processed online without ever having to meet the applicant. All he / she has to do is provide the necessary information when due and the applicant can receive the loan within 24 hours of approval.
MYTH 3: RATES ON PERSONAL LOANS FROM ONLINE COMPANIES ARE TOO HIGH.
This myth falls under the class of those born out of misconception. This is because the rates demanded by online companies are unsecured (without collateral), however, they are compared against rates on secured loans (loans with collateral). However, when compared to the rates on other unsecured loan agencies, e.g. the rates demanded on credit cards loans, you’d realise that you always had the better deal.
MYTH 4: LOW CREDIT SCORE OR UNSATISFIED LOAN CAN RESULT IN A DISAPPROVAL OF APPLICATION
Whilst this is not the case anymore, it hasn’t stopped the notion from spreading. The quick response to this would be that it is false and that most financial institutions also look at other factors such as; income to calculate the applicant’s repayment capacity. If they feel the applicant can repay based on the analysis, then they can approve an application in spite of low credit ratings or an unrepaid loan.
MYTH 5: ONLINE COMPANIES DON’T GIVE BUSINESS LOANS.
This is quite untrue. This presumption must have been formed due to the bottleneck that exists around the approval of business loans. However, it is pertinent to note that these loans are unsecured and unlike with the personal loans, there is no way to fully calculate the repayment capacity of the business. The unsecured nature of these loans and the lack of guarantee, is the reason why the lender company has to put anything it feels would be a protection or guarantee in place.
So, we have analyzed five (5) of the most popular myths about loans and used the practices of an industry giant to show how untrue they are. If you have any further enquiries, feel free to reach out to us via our email email@example.com and 070033462623.